My Great Father and Mentor picked pieces of me off the Autumn Laden streets of Manhattan at the turn of the Millenium, and with unconditional love, he sewed and stitched endlessly till I reached a dynamic relative measure of perfection.
I am now a Porcelain Doll named Lockheed HayHeeHoo Macedon with potent insight on macroeconomics.

Saturday, January 26, 2008

Scapegoats of Societe Generale...

Consider that Societe Generale had just announced a 1.2billion loss from subprime(the day before they released the news of the 5billion loss from the trader) which based on the trader news instilled a 5.5billion 'emergency' injection' from shareholders. I smell a young scapegoat for a larger subprime problem that has been brewing at Societe Generale for several years now, using a nutjob young trader as a media diversion tactic to cover their losses in subprime caused by the non-rank and file executives. This kid didn't profit from any of his rogue trades, and the staggering loss was registered within less than a month? So that raises a red flag to me, saying there's much more to this then some wackjob kid. Yeah, that's my speculative take on the story.Bottom line, start buying SocGen stock now, as more hostile takeover attempts begin.

2 Comments:

- The guy worked for 3 years in back office / middle office before being promoted to junior trader, and knew how to hack the system and bypass the controls

- The trades were not his. Some more senior traders took the posiitons, but when the market moved against them on monday, decided to say the trades were not authorized and to blame the junior guy.

The latter sounds much more plausible, but either way there had to have been fraudelent offsetting trades or P/L wouldve picked up on it ricky-tick, yo.

The thing I really dont understand is, they must've had your amount of fraudlent trades on the book that they arent getting charged brokerage for by the exchange (since they were futures positions and you cant trade those in the direct market). If all of these trades didnt happen in the same month, how in the hell didnt accounting pick up on the brokerage discrepancy?